Are you covered for oil spills at home? Massachusetts bill would make sure
Springfield resident Tina Lanzillo had difficult decisions to make after her basement flooded with 100 gallons of oil last month.
She had to choose between spending money at a hotel for her family — which required three rooms for her nine family members — or returning back to the house after the oil was pumped out and living with the lingering fumes.
Lanzillo’s insurance company told her they would only cover $10,000 worth of damages after Kutty’s Fuel Oil mistakenly delivered 100 gallons to the wrong house and flooded the basement of Lanzillo’s Pennsylvania Avenue home on Oct. 24. That meant she had to put her family’s health at risk due to the toxic fumes and return to the house because of financial constraints.
“At this point in time I did not hear from my insurance company and I didn’t know how to handle it,” Lanzillo said. “I was also relying on using my credit card to get some footwear and a couple of pairs of stuff for people in the basement who had nothing, and it was an expense that I was a little nervous about.”
When the Lanzillo family returned to the house, they converted their dining room into a makeshift bedroom and another person moved into a bedroom on the second floor. “We are very crowded,” she said, three weeks after the flooding incident.
Many homeowners who find themselves in predicaments like Lanzillo’s learn their insurance policies do not cover contamination-related spills due to heating oil, according to an environmental lawyer who spoke with MassLive.
Lawmakers are attempting to change that by creating a law that would require insurance companies to automatically provide fuel oil spill coverage to all Mass. homeowners with insurance.
A bill currently in the Massachusetts Statehouse would mandate Massachusetts homeowners get property insurance coverage to protect against home heating oil contamination. The state Senate passed the bill in the spring and now the bill sits with the state House Ways and Means Committee.
Since 2010, state law has required homeowner property insurers to offer coverage for leaks from oil heat systems and required homeowners to install leak-prevention systems.
The cost to clean up oil spills much smaller than the flood at the Lanzillo’s home can typically range from $20,000 to $50,000 for “simple releases,” an environmental lawyer told MassLive.
In more extreme cases, when oil spills or leaks seep into the concrete and contaminate the soil or water beneath a home’s foundation, costs can rise to more than $500,000 for “complex releases,” according to Susan Crane, a Massachusetts attorney specializing in environmental law.
Crane said many Massachusetts residents are shocked when they learn that their insurance policies don’t cover contamination-related claims — often only after an oil leak happens.
“My phone is ringing off the hook with homeowners,” Crane said in an interview on Tuesday. “I can’t help them all there are so many. It’s horrible. Most of them are shocked to learn they don’t have homeowners insurance that covers something like this.”
About 110 homeowners report oil leaks annually, according to the Mass. Department of Environmental Protection. Roughly 650,000 of homeowners statewide use fuel oil for heat, which represents about 24% of the state, according to the Mass. Department of Energy Resources.
One of Crane’s clients is a Worcester County man in his 80s living on a fixed income. He had an oil spill of over 100 gallons in his basement. He’s already spent $60,000 to clean up the oil, and he’s “nowhere near completing the cleanup,” Crane said.
So far his insurance company has refused to “step up to the plate to take care of this,” Crane said, and the Worcester County man had to take out a home equity loan to pay for the clean-up costs, which he is responsible for under Massachusetts environmental laws.
“It’s a terrible position to be in,” Crane said. “He never ever expected to have this kind of catastrophic event.”
Compared to more common oil leaks from deteriorating gas tanks, Lanzillo’s situation is unique because the fuel company is responsible for delivering fuel to the wrong home and their insurance company is paying for the clean-up effort. Kutty’s Fuel Oil has not returned multiple requests for comment.
In both cases, however, clean-up efforts turned their homes into construction zones as excavation is required to dig up the concrete and into the ground to get the contaminated soil out.
As for getting the support she expected from her insurance company, Lanzillo said it is not there.
“I feel like I’m fighting for every inch that I’ll need,” Lanzillo said. Her insurance company is not representing her in assessing the lost damage and she’s had to work with Kutty’s insurance company to get compensation for items lost in the flood.
“You trust your insurance company and then this happens and then it’s like, ‘Oh, my god, it wasn’t covered,’” Lanzillo said.
A member of an insurance lobbyist group told MassLive that the proposed bill would place an additional burden on homeowners who do not heat their homes with oil.
Christopher Stark, the executive director of the Massachusetts Insurance Federation, which provides advocacy for insurance companies, said the group is opposed to the legislation because “roughly 25% of the state heats with home heating oil that the other 75% have to subsidize with this inclusion.”
Stark recognized that the “education factor is lacking,” but he said the group would support working with fuel oil dealers and insurance companies to educate the public on the availability of oil spill coverage policies versus mandating it in state law.
Crane said that it is unfair that residents who heat with oil currently have to pay insurance premiums for cleanups for other forms of heating in Massachusetts.
“What about insurance claims for all of the gas explosions and electrical fires caused by those heating energy sources that are covered automatically under all homeowners policies, which the 25% who use oil pay for with their premiums?” Crane asked. “Homeowners policies are all-risk policies, not tailored to each homeowner’s particular risks — that’s how insurance works to spread the risk. So that criticism is simply unfair.”
Members of a non-profit made up of scientists, engineers, and public health specialists called the Licensed Site Professionals Association helped craft Senate bill No. 2830 and state Sen. Anne Gobi introduced the bill to mandate insurance coverage for home oil spills.
State Rep. Bud Williams, who represents Springfield and sits on the Ways and Means Committee, told MassLive that he supports the bill and would like to see the bill taken up before the end of the state House’s informal session ending at the beginning of January.
“Absolutely,” Williams said about supporting the bill. “You have to give homeowners some kind of recourse in this nightmare.”
Licensed Site Professionals executive director Wendy Rundle estimates that only about 13% of homeowners with oil for heating have insurance coverage for spills, citing data she’s gotten from the state Department of Environmental Protection. Last year, she said, it was only 7%.
Rundle said a big problem is that many insurance brokers for homeowners don’t know that this type of insurance is available
Rundle said that insurance companies and brokers are not currently communicating well enough with homeowners about the existence of liquid fuel riders as part of their insurance coverage since the 2010 law. These typically can cost a homeowner less than $100 a year to protect homeowners when oil spills occur.
“Many of the reports that come back to us is that insurance brokers don’t know that this insurance is available,” Rundle said. “There are folks who work in this field, who know it exists, and they ask the brokers to please go back and check because I know this is available.”
Crane said homeowners currently have a lot of the burden in order to make sure their insurance policies cover oil spills.
“Insurance policies are 60 to 80 pages long and the terms are so esoteric,” Crane said. “You have to be an environmental lawyer to understand the pollution exclusions buried in various places.”